The post-pandemic economy will see a new class of growth stocks emerge, Fundstrat’s Tom Lee says

Thanksgiving airport coronavirus
Travelers wearing protective face masks walking through Concourse D at the Miami International Airport on Sunday, November 22, 2020 in Miami, Florida. David Santiago/Miami Herald/Tribune News Service via Getty Images


As the economy climbs out of the pandemic, a new class of stocks could emerge as investors’ go-to for growth: cyclical stocks.

That’s according to Tom Lee, who is anticipating that after a year where growth was dominated by technology and stay-at-home plays, stocks that hinge on an economic recovery have the most upside in 2021.

The Fundstrat head of research said that in 2021, Americans will shift away from their “digital life” and back to an “analog life.” While the COVID-19 pandemic was similar to a wartime economy, 2021 will be a post-war period, with a focus on rebuilding, and the stimulus bill approved by the House on Wednesday will further solidify these changes, Lee said.

Businesses will reopen, US households will receive substantial relief from the incoming stimulus package, and infrastructure spending will increase.

All of these changes will likely change the “psychology of investors,” Lee explained. If theme parks are booming, no one will want to buy Netflix, and if people are taking their first trip in a year, they won’t be thinking about buying Zoom.

In the post-pandemic economy, cyclical stocks, those that gain when the economy expands, will be the new “growth stocks.”

“After any war, cyclical companies become growth companies as economies are rebuilt. This is why cyclicals, in our view, are taking leadership,” said Lee.

Lee introduced a “Power Epicenter Trifecta” list to identify the cyclical stocks with the strongest price appreciation potential.

Some names on the list include travel stocks Norwegian Cruise Lines and Royal Caribbean, Delta Airlines, energy stocks like Exxon Mobil and Schlumberger, and even office REITs Boston Properties Inc and Highwoods Properties Inc.